Rolfe Winkler

When the SEC announced its case against Goldman this morning, the Commission’s Director of Enforcement, Robert Khuzami, happened to be at the same New Orleans conference as this columnist. I’ll have more thoughts after I’ve had a chance to read the complaint. In the meantime, I thought I’d share some notes from the question/answer session he did with those of us in the mini press corps on hand.

Here’s the tape from CNBC. Your correspondent was off to Khuzami’s right…

Notes:

1. How is this different than any other synthetic CDO? All of them are structured with a short on the other side.

He said there’s a difference between just going short and going short while simultaneously picking the bonds that are in the deal. The securities fraud occurred when Goldman failed to disclose the role Paulson played picking the bonds.

2. There are likely many other cases of subprime shorts directing the structuring of CDOs. Magnetar is one. But there are guys mentioned in Michael Lewis’s book, and many others besides Paulson. If the SEC is targeting Goldman for failing to disclose the role shorts played in this deal, will it target other banks who may have similarly failed to disclose?

He said they’re looking at a wide range of products … If they see securities with similar profiles, they’ll look at them closely.

3. According to e-mails in the complaint, ACA was communicating with Paulson and had final say about bonds went into the deal. So is it really that misleading to tell investors that the bonds were selected by an objective third-party manager?

Paraphrasing Khuzami’s response: ACA wasn’t really an objective third-party constructing the portfolio, as promised by offering docs, since Paulson was so heavily involved.

4. What about the SEC’s reputation? After the BofA blowup, it will look pretty bad if this prosecution fails.

Paraphrasing: Our job is to investigate and bring cases and that’s what we’re doing here.

Reporting from somewhere over Louisiana (Delta in-flight WiFi = very cool). Big bank failure news far tonight is a coordinated closure of three banks that involves three different regulators and a 50%/50% loss share agreement with FDIC and the acquiring bank. Typical loss-shares had been 95/5 and the news was they were going to 80/20. Here the FDIC has apparently secured a deal to share losses equally.

#43

—Failed bank: Lakeside Community Bank, Sterling Heights MI
—Regulator: Michigan Office of Financial and Insurance Regulation
—Acquiring bank: None
—Transaction: payout transaction
—Vitals: assets of $53 million, deposits of $52.3 million
—Estimated DIF damage: $11.3 million

#44

—Failed bank: AmericanFirst Bank, Clermont FL
—Regulator: Florida Office of Financial Regulation
—Acquiring bank: TD Bank, National Association, Wilmington DE
—Transaction: 50/50 loss share on total of $2.2 billion of assets among three institutions
—Vitals: assets of $90.5 million, deposits of $81.9 million
—Estimated DIF damage: $10.5 million

#45

—Failed bank: First Federal Bank of North Florida
—Regulator: OTS
—Acquiring bank: TD Bank NA
—Transaction: 50/50 loss share on total of $2.2 billion of assets among three institutions
—Vitals: assets of $393.3 million, deposits of $324.2 million
—Estimated DIF damage: $6.0 million (one of the smallest loss rates as % of assets since WaMu cost the DIF $0)

#46

—Failed bank: Riverside National Bank of Florida
—Regulator: OCC
—Acquiring bank: TD Bank NA
—Transaction: 50/50 loss share on total of $2.2 billion of assets among three institutions
—Vitals: assets of $3.42 billion, deposits of $2.76 billion
—Estimated DIF damage: $491.8 million

#47

—Failed bank: Butler Bank, Lowell MA
—Regulator: Massachusetts Division of Banks
—Acquiring bank: People’s United Bank, Bridgeport CT
—Transaction: loss share of $206 million of assets
—Vitals: assets of $268 million, deposits of $233.2 million
—Estimated DIF damage: $22.9 million

#48

—Failed bank: Innovative Bank, Oakland CA
—Regulator: California Department of Financial Institutions
—Acquiring bank: Center Bank, Los Angeles CA
—Transaction: loss share on $178.1 million
—Vitals: assets of $268.9 million, deposits of $225.2 million
—Estimated DIF damage: $37.8 million

#49

—Failed bank: Tamalpais Bank, San Rafael CA
—Regulator: California Department of Financial Institutions
—Acquiring bank: Union Bank, NA, San Francisco CA
—Transaction: loss share on $522.3 million of assets
—Vitals: assets of $628.9 million, deposits of $487.6 million
—Estimated DIF damage: $81.1 million

#50

—Failed bank: City Bank, Lynnwood WA
—Regulator: Washington Department of Financial Institutions
—Acquiring bank: Whidbey Island Bank, Coupeville WA
—Transaction: loss share on $455.6 million of assets
—Vitals: assets of $1.13 billion, deposits of $1.02 billion
—Estimated DIF damage: $323.4 million

Treasury’s March report for the its mortgage modification program shows another uptick in the number of so-called “permanent” modifications. It’s a positive trend, sure, but still not much to celebrate.

The 231k borrowers that have received such mods represent only a fraction of total borrowers who are at-risk of default. Amherst Securities estimates that 7 million borrowers have already defaulted on their mortgage and another 5 million are at high risk of default.

But the bigger problem is that these “permanent” modifications are anything but permanent…

As you can see, relatively few borrowers are receiving principal forgiveness. Instead, most modifications rely on extend and pretend tactics like interest rate reductions and extended loan terms. Many loan modifications also simply add missed payments to the loan balance. Such tactics do nothing to solve the key problem of negative equity. Unless borrowers have skin in the game, they’ll have much less incentive to stay current.

The scarier stat is the so-called “back-end DTI” figure. At 61.3%, the average is up nearly 2% since last month.

This means that the average borrower receiving a “permanent” modification still faces total monthly debt payments — including home equity loans and all the other stuff mentioned in footnote 2 — amounting to 61.3% of monthly GROSS income. So even before taxes are taken out, nearly two-thirds of borrowers’ pay has to go to pay down debt, leaving little for other necessities.

The HAMP modification program only targets first mortgages for modification, and then only reduces payments on the first mortgage and other housing expenses to 31% of gross income. That’s high on its own, never mind all the other debt these borrowers are carrying. A program to modify second liens has launched, but won’t ramp up for a few months.

The bottom line is that HAMP mods are likely unsustainable. Expect many of these borrowers to re-default.

Hi folks….just a heads up that I’m traveling to New Orleans this afternoon for the Tulane Corporate Law Institute. So posting will be lighter than normal next few days.

The Origins of the Next Crisis (Ed Harrison) Great post. Long, yes, but also wise. Understanding the distinction between stocks and flows is very helpful.

Crack shack or mansion? (ht Kedrosky) I scored a 14 out of 16….lucky guesses all.

Imagine the bailouts are working (Sorkin, NYT) Well said. I would add that the government could make as much money as it wants to the degree its willing to borrow/inflate to drive up the price of assets it has purchased. But it faces its own peculiar liquidity constraint. Eventually accumulated assets have to be sold back to the market. Theoretically anyway. The more it accumulates, the more it must unload, putting more downward pressure on prices when the unwind gets into gear.

Fed’s Tarullo: Consider regular bank stress tests (Kaiser, Reuters) Great idea. The Breakingviews team agrees!

Wherein Kerry Killinger “takes responsibility” for WaMu’s collapse and then totally absolves himself of responsibility (Congressional testimony) He perpetuates the canard that WaMu was seized prematurely. Bull. Depositors were running and the bank was insolvent. It is the law of the land that regulators seize such banks in order to protect the Deposit Insurance Fund. The fact that a $300 billion insolvent bank was seized, sold off and cost the DIF nothing is, without doubt, FDIC’s greatest accomplishment of the crisis.

FDIC wants to extend new deposit insurance program (FDIC) Sheila Bair may want to extend it even further, beyond the December expiration according to comments at a public meeting.

FDIC is pitching this as a way to protect small banks. They point to this chart (click here to enlarge):

It shows how depositors in transaction accounts (which business use for things like meeting payroll) flew from small banks to protected TBTF banks in autumn ’08. The TAG deposit insurance program arrested that flight.

But expanding deposit insurance just deepens moral hazard. It would take an act of Congress to expand this program to 2013. Better that they put a tighter cap on the market share of deposits banks are allowed to hold.

Sheila Bair is well aware of the moral hazards created by TBTF banking. Yet she ignores the moral hazards created by her own agency…

MUST READ — How One hedge fund kept the bubble going (Eisinger/Bernstein, ProPublica) Yves Smith broke open the Magnetar story in Chapter 9 of her book. Bottom line, one hedge fund called Magnetar was able to use a little bit of cash to sponsor the creation of ultra-toxic CDOs, which they turned around and bet against via credit default swaps. Imagine building a house on top of a fire-pit and then over-insuring it. (This is why I’ve argued CDS should be regulated as insurance.) Meanwhile, the CDO departments at banks were happy to do the deals because it meant  bigger bonuses for them. Bank executives and risk managers higher up the chain hadn’t the first clue how these exotic instruments were structured so they agreed to warehouse some of the riskiest parts of the securities on their own balance sheets in the name of getting the deals done.

Financials seek to soften Basel stance (Jenkins/Masters, FT) Hopefully regulator backbones stay stiff in the face of banker protests regarding tough new capital and liquidity requirements.

The DTA dodge (Alloway, Alphaville) Speaking of bank capital, Alphaville has an updated chart from Barclays showing deferred tax assets for the top U.S. banks.

Walking against Australia’s housing mania (Steve Keen) Keen lost a bet that Australian property prices would crater. Turns out he didn’t anticipate his government’s resolve to prop up the market. As a result he has to complete a 225km trek. It may take a few years, but I think Steve will have the last laugh…

CoCo goes to cable (Carter, Media Decoder)

VIDEO — After pitching 3 innings of scoreless relief in his second appearance, reliever Chan Ho Park explains to the media why his first appearance was terrible (YouTube)

2010 Pulitzers (Pulitzer.org) National Enquirer absolutely deserved one for breaking open the John Edwards sex scandal.

Hallucinogens have doctors tuning in again (Tierney, NYT)

10 Google tricks (Mackie, NYT)

Doing a barrel roll while pouring ice tea…(at end of video, though whole thing is entertaining)

Looks like just one tonight….

#42

—Failed bank: Beach First National Bank, Myrtle Beach SC
—Regulator: OCC
—Acquiring bank: Bank of North Carolina, Thomasville NC
—Vitals: assets of $585.1 million, deposits of $516.0
—Transaction: loss share covering $497.9 million of assets
—Estimated DIF damage: $130.3 million

Meanwhile, SNL Financial reports that bidding has been hot for failed bank assets. No wonder FDIC is pushing back on loss shares and looking to participate in the upside for publicly traded banks that submit winning bids…

I believe that during the past 18 months, there were very few instances of serial default and contagion that could have not been contained by adequate risk-based capital and liquidity. I presume, for example, that with 15% tangible equity capital, neither Bear Sterns nor Lehman Brothers would have been in trouble. Increased capital, I might add parenthetically, would also likely result in smaller executive compensation packages, since more capital would have to be retained in undistributed earnings.

-Alan Greenspan*
FCIC Testimony, 4/7/10

(Click here to enlarge)

It’s a question on everyone’s mind: how much capital must banks be made to hold? No other regulatory change can do as much to prevent another financial collapse. A bigger equity cushion not only buffers bank creditors from losses — preventing cascading bank runs — it by definition would reduce frothy lending that inflates bubbles in the first place.

The issue has new immediacy today, in the wake of revelations published by WSJ that major banks are masking their leverage. Because balance sheets are reported at a single point in time, i.e. the last day of the quarter, there’s an incentive to reduce risk around that particular day in order to present a pretty face to the world. Meanwhile, during the quarter banks are jacking up leverage in order to boost profits. While Lehman actually hid leverage (with Repo 105), other banks are temporarily reducing it, “understating debt levels used to fund securities trades by lowering them an average of 42% at the end of each of the past five” quarters.

This is just another reason that, when setting new capital standards, regulators should err on the high side. Not only are banks sitting on large embedded losses with the help of extend and pretend accounting, there’s now strong evidence they’ll game whatever standards are set.

But what’s the right number? Few have been willing to commit to a figure. For instance, while the Basel Committee of international bank regulators has proposed strict new definitions for capital — and liquidity — it has yet to tender suggestions on precisely how much banks should be made to hold.

It’s notable that Alan Greenspan says 15% tangible equity would have been a good cushion for Lehman and Bear. Extrapolated across other major banks, the 15% figure implies they’d have to raise nearly $900 billion, a truly stupendous figure.

That’s so high, it’s hard to contemplate the implications. Suffice it to say, it’s not happening. Banks couldn’t come close to raising such sums even if they were commanded to by regulators. And such a draconian standard would hammer lending. I argued in my Breakingviews column yesterday (paywalled folks, sorry!) that regulators need to be concerned with raising capital standards, not lending levels, which are conflicting goals. But 15% TCE is a bit much.

But in setting a very high bar, Greenspan may have done regulators a favor. Perhaps it will give them cover to raise capital standards higher than they otherwise would. When banks inevitably complain, regulators can retort that they’re cutting them more slack than The Maestro would!

——-

*Hat tip to HuffPo’s Shahien Nasiripour for spotting this in Greenspan’s testimony.

By now everyone knows that big banks have A LOT of second lien loans on their balance sheet. But how much is at risk of being written off? CreditSights put out a report that helps answer that question (no link). In the meantime, regulators may dust off a shelved capital rule so that they’ve more capital to deal with the problem.

(Click here to expand)

Total home equity exposure at banks is pretty big. Amherst Securities has said commercial banks hold approximately $767 billion of the total $1.05 trillion of second mortgages outstanding, with the Big 4 holding over $400 billion alone.

But the key issue is what portion of these are at risk of writedowns. Most vulnerable are loans (or portions thereof) that are no longer backed by property. That is, the price of the underlying home has fallen below the balance on the loan. In banker shorthand: “loan-to-value” (LTV) is greater than 100%.

These are in peril because home equity loans are frequently structured with big principal payments on the back end, so even though many borrowers are currently making payments they’d need to stump up an awful lot of cash to pay off the balance. Unless housing miraculously recovers and they can sell or refinance at a price that will pay back all their debt, well, expect a spike in walk-aways…

CreditSights takes a stab at the potential writedown for the Big 4 banks and finds that Wells Fargo is particularly vulnerable.

The tricky part of the analysis is how much reserves banks have built against these loan books to absorb losses. There, disclosure varies by bank, so CS had to take a stab.

The truly dire scenario would be to mark down the entire portion of home equity debt that exceeds home values. Net of estimated reserves that would be:

—$37.2 billion for Wells
—$29.9 billion for JP Morgan
—$28.6 billion for BofA
—$11.5 billion for Citi

Banks would say this is overstating likely losses. And they’d be right. Plenty of other unsecured loans get paid down (credit cards, student loans) so unsecured home equity loan balances aren’t a total writeoff. But again, unless house prices come back, folks may have big trouble paying off balances.

By the way, it’s a testament to banks’ short-sightedness during the bubble that they held on to most home equity paper. They thought they were reducing interest rate risk by holding these loans, which carry higher, often variable rates. But they ignored credit risk, blithely assuming house prices would perpetually ascend allowing borrowers to perpetually refinance.

Luckily regulators are paying attention. In fact, they plan to dust off a new capital rule that was shelved during the crisis. Among other things it would force banks to hold more capital against home equity loans where LTV is above 90%.

Specifically, such loans would see their “risk-weighting” boosted from 100% to 150%. To be considered “well-capitalized” banks must hold capital equivalent to 10% of risk-weighted assets. So, for instance, Wells might have to hold an additional $3.1 billion (=$62.6bln*50%*10%). For the other three, see the graphic.

Even if banks hold more capital against these books, it may not be enough to avoid a substantial hit to their earnings…

Greenspan: Lehman would have needed $68 billion more capital (Nasiripour, HuffPo) Great find from Shahien.  Greenspan said in written testimony that “with 15% tangible equity capital, neither Bear Sterns nor Lehman Brothers would have been in trouble.” 15% is a boat load. As of May 31st 2008, Lehman had just 4.3%. They’d have needed an additional $68 billion of capital to be at 15%!

Gold hits record high — in euros (Pleven/Whittaker, WSJ)

How Visa predicts divorce (Ciarelli, Daily Beast) The article fails to answer that question, but it’s still pretty interesting…

California’s $500 billion pension time bomb (Crane, LA Times)

DOC — FDIC rebuts WSJ op-ed (FDIC) This was in response to an op-ed yesterday that said FDIC has no experience resolving large institutions and therefore the resolution regime in the Dodd bill doesn’t make sense. I’m sensitive to arguments that FDIC may get in over its head, and yet, FDIC resolutions are the best way we know how to close failed financials. Losses are imposed on shareholders and creditors and the integrity of the financial system is protected.

Verily, Volcker avers VAT in vicinity (Pethokoukis, Reuters Breakingviews) Worth linking to just for the alliteration in the headline.

Bernanke sounds warning on deficit (Irwin/Montgomery, WaPo)

Tourists (imgur) This reminds me of Times Square, where folks think it’s interesting to be photographed in front of an Applebee’s marquee.

The first thing for trig (imgur) For math geeks!

Taiwanese boy does Whitney Houston (YouTube) Mind. Blown.

$45 fee for carry-on luggage? (Peterson/Seetharaman, Reuters) Airlines gotta make money somehow!

Nearly half of households pay NO federal income tax (Ohlemacher, AP)

Citi: The mortgage underwriter’s tale (Felix)

Chart — Consumer credit tumbles in February (Culp, Reuters) De-leveraging. Good.

Asset bubbles and implications for monetary policy (Dudley, NY Fed) At least now the Fed will admit bubbles exist. Difficulty in spotting them is no excuse for inaction Dudley offers, helpfully. He still punts on tightening monetary policy as a counterweight, arguing that regulation and supervision are better ways to contain bubbles. One way regulators can do more is substantially raising capital requirements. Meanwhile….

KC Fed’s Hoenig urges rate increases “soon” (CR) He wants to move towards a Fed funds rate of 1%.

Why not an annual bank stress test? (Cox, Reuters Breakingviews) Here’s a case where rinse/repeat would make sense…

Flashback — Did Greenspan add to subprime woes? (Ip, WSJ) I link to this old piece because, among other things, Greenspan today blamed the late Ed Gramlich for the Fed’s failure to get tough on subprime.  Greenspan said the Fed didn’t regulate subprime b/c Gramlich — the Fed’s expert on the topic — didn’t bring his concerns to the full board of governors. But as this old interview makes clear, Gramlich swallowed his concerns out of deference to Greenspan, who was clearly opposed. Unfortunate that Greenspan threw him under the bus like that.

Film Dept lowers IPO target (McNary/McClintock, Variety) They’ve pushed the offering date back at least twice. Still not a fan.

Quote of the Day — from Brooksley Born, confronting Greenspan about his refusal to regulate derivatives. Born said this after Greenspan argued CDS would have blown up AIG even if they’d been insurance policies. Paraphrasing:

Had [CDS] been sold as insurance products, they would have been regulated. There would have been a capital reserve requirement. There would have been an insurable interest requirement. There was no such regulation in the OTC derivatives market thanks to the President’s Working Group and Congress.

Booyah. Must have been cathartic. (Take a look at the authors of the PWG report.)

Kim Jong-Il: Fashion Icon (AFP)

Avatar…and predecessors (imgur) By the time I got to the last three rows I busted up.

So much for Canadian sobriety?

Recently the country’s chief bank regulator was in NYC to take a victory lap about successful bank regulation north of the border. Paul Krugman has argued that Canadian banks are superior to American banks because they are boring.

And yet a housing bubble is clearly inflating, and its cause — big household leverage — is familiar.

The latest news out of Vancouver, where the average price for a single detached home now exceeds $1 million, is that…

…prices have climbed 23.3% in just 12 months, and are now nearly 3% higher than they were before the housing market crashed.

But no one is worried according to Paul Kedrosky:

It’s okay, say local realtors and the like. Because of the economic rebound. And the Olympics. And the warm winter there. Vancouver is different.

Nor is the bubble limited to Olympic-site Vancouver, according to a previous article from Phred Dvorak in WSJ:

Dominic Carrasco first tried to sell his studio apartment [in Toronto] in January 2009. The only offers the 42-year-old massage therapist got were well below the 166,900 Canadian dollars he’d paid for it five years earlier.

Last month, Mr. Carrasco tried again. The condominium was snapped up by the woman in charge of posting the information to the real-estate listing site, for C$209,900, or US$196,003, 40% more than the highest bid last year.

The bubble has familiar causes as Simon White of Variant Perception told me in an e-mail recently:

…household debt to income in Canada is now more than in the US.  All the usual metrics to gauge whether housing is overvalued, eg House Price/Income or House Price/Rent are at levels up to over 30% from their long-run average.  These are normally consistent with an overpriced market that is due for a correction; the question is when, as often these things persist for much longer than most people dare to guess.

If Canada’s banks are behaving so responsibly, where are households getting so much leverage?

DB’s $1 billion financing for Riga (Wood, Risk Mag) From the folks that originally broke the Greece/Goldman derivatives issue way back in 2003: “A financing transaction arranged for Riga by Deutsche Bank shows how local authorities can lay their hands on spending money without reporting it as debt.”

Blackrock warns banks on distressed mortgages (Van Duyn, FT) Blackrock says banks need to write-off borrower debts before they’ll consider extending new credit via private-label mortgage investments…

Greek Bond Vigilantes out in force (Papadimas, Reuters) Greek bond spreads are back at January highs. See the next link for where this may be coming from…

Greece seeks new investors to sidestep IMF (Coghill/Dahinten, Reuters) An earlier story said Greece wants to find new buyers for its debt so that it can sidestep tough austerity measures the IMF is likely to impose. One wonders who would actually buy dollar-denominated Greek debt, especially considering it could be a ploy to avoid getting the country’s budget in order. Perhaps the same folks who bought similar Russian debt circa 1997. My colleague Edward Hadas says a Greek default may be the answer….

Financial Crisis Inquiry Commission wrestles with setbacks (Chan/Dash, NYT)

Fannie/Freddie touch off swaps scrap (Patterson, WSJ) Cool. Fannie and Freddie will use their heft in the interest-rate swaps market to force them through clearinghouses. Exchanges would open up more competition, but clearinghouses are a start.

Chart — 40 years of the Canadian dollar (Culp, Reuters)

Baseball season! (YouTube) Too bad my Cubs are terrible. (This is a 5 yr old reciting Herb Brooks’ Miracle Speech)

Product placement (imgur)

Beyond bankruptcy and bailouts (Sheila Bair) The FDIC Chairman pens this good op-ed in the WSJ.

I saw the crisis coming. Why didn’t the Fed? (Burry, NYT) The glass-eyed Nostradamus who saw early the coming collapse of the subprime market, and was profiled in Michael Lewis’s book, does little more than take a victory lap in this op-ed. He doesn’t bother to address concerns that by investing in CDS, he was providing liquidity for the construction of synthetic CDOs. This perpetuated the bubble and made the collapse worse. Actually his question has a fairly easy answer in my view, which I’ll argue graphically later this week.

Hoenig says to break up megabanks (Nasiripour, HuffPo) The Kansas City Fed President would have been a better choice for Vice Chair of the Fed…

Thoughts on Maiden Lane III (Aleph) After the Fed released some details about the Maiden Lane portfolios last week, David Merkel has done some clever back-of-the-enveloping to estimate what the holdings of III are worth.

Pay of hedgies roared back last year (Schwartz/Story, NYT) Wow. David Tepper cleared $4 billion?!? That’s on the moral hazard trade, folks. He bet big that the gov’t wouldn’t let banks collapse. I originally misread this piece. I thought the opening paragraph said Tepper’s firm was up $4 billion for the year. No, that’s what he cleared apparently. Better than Paulson’s bet on subprime!

Intro to 13 Bankers (Johnson/Kwak) Johnson is now calling Jamie Dimon the most dangerous banker in America.

Crisis forgotten in bond buying frenzy (Crane, Reuters BV) My colleague Agnes writes about how fixed income investors are back to chasing risk…

Munis are the next potential crisis (Bookstaber)

Oil hits 18-month high (Johnson, Reuters) + Dow near 11,000 (Yahoo Finance) Beware asset bubbles….

Peep show (imgur) definitely sfw

Cross-posted from Friday’s NYT.

By Rolfe Winkler and Antony Currie

JPMorgan’s crisis lead appears to have vanished. Jamie Dimon’s investment bank was crowned king of the downturn. Last year, it sat atop the debt and equity underwriting league tables, and was number two in merger work. But it looks as though the edge is proving hard to keep.

JPMorgan’s market share in all three advisory businesses dipped in the first quarter of 2010, and not just from the same period last year, according to Thomson Reuters. More noticeably, they’ve fallen or stayed flat since the peak of the boom.

The damage firms like Citigroup and Merrill Lynch inflicted on themselves certainly helped JPMorgan solidify its position. Citi’s share of debt underwriting — a traditional strength — has dropped 4.5 percentage points since first quarter 2007. Bank of America Merrill Lynch  has lost 9 percentage points of market share in M&A.

But while rivals’ slides have slowed or stopped, JPMorgan’s started in the first quarter. In debt underwriting, it fell back to fourth place — and the same 8 percent market share it held in 2007. Dimon’s equity underwriting team has shed much of the business it held when conditions were at their worst. And the huge percentage of share JPMorgan snatched in the shrunken crisis M&A market has all been given back.

It’s not exactly a disaster just yet. This is only one quarter’s worth of data. Plus, JPMorgan is still top dog in equities. And it was just $14 billion behind BofA Merrill in the $1.5 trillion worth of debt capital markets activity for the quarter.

Still, the figures show how hard it is to stay ahead. JPMorgan’s ability to lend, relatively solid earnings and good press will only go so far. Clients ideally want a choice of middle-men with whom to work. Some may still be grumpy about having had only JPMorgan to turn to in the tough times, when the bank had the opportunity to stand firm on fees.

With the worst of the crisis apparently behind, Dimon’s fortress balance sheet has some competition. And judging by the first-quarter numbers, his rivals are coming back fighting.